CRM: It's a tool, not a magic lamp

Customer relationship management, and its cousin customer experience management, are not new. Back when in-person transactions dominated the average customer experience, banks spent fortunes on ornate marble lobbies, columned fortresses of buildings, and mighty vaults of gleaming steel, in large part to convey to the customer the bank's integrity, solidity, and trustworthiness.

Now, of course, a lot of that doesn't relate when customers do their transactions on bits of plastic with buttons and screens. Today's customers actually can be somewhat intimidated by the cold halls of old. However, banks still do have customers, and their relationships and experience must be managed, and the focus of all that has switched to finding the technological means in which to do it.

All sorts of providers are out there to provide CRM "solutions"-solutions that often are assumed by some bankers to be magic lamps which, by plugging in software, all their customer relationship issues will be solved. In truth, a lot of these solutions, if not all, can deliver on what they claim to be able to do.

But it must be realized that these solutions are tools to be used. A hammer is a tool and, if used properly and skillfully, it can build a house. If not, it can smash a thumb.

A lot of thought has been given to this, not least among the vendors themselves. After all, they want their bank customers to succeed simply because if they do, the vendors will succeed.

"CRM is much more than a technological solution," says Infosys in one of its white papers. "It is a strategy integrated in the business model of the banks and clearly oriented to value generation. CRM is a key element of differentiation that lets the bank develop its customer base and sales capacity. Today the environment is changing dramatically, and so too is banks' approach to their customers. A well-thought-out CRM strategy lets them improve the sales experience of the customer; develop the potential value for customers, increase sales, productivity, and efficiency; and create personalized one-to-one service,

Several points in that statement merit emphasis. CRM is not only technology. It promotes differentiation. Most important, it involves personalized, one-to-one service, meaning human beings interacting with other human beings.

Such sentiments are apparent in pronouncements by other CRM providers, even as they seek to feature their own technological solutions.

Lattice Engines, for example, recently launched a feature that uses big data analytics to turn insights from social media into actionable leads for sales people and markets. Again, the company highlights its product as a tool to be used intelligently by people.

"Sales reps are researching up to 15 different external data sources to find prospect information and are spending nearly a day a week on prospect research. They may find information on a prospect, but without context or the benefit of how that information has changed over time, it can waste valuable time and often provide limited or even misleading insights," the company says as it describes a problem that their product is meant to solve. Again, there's the sense that's this is a tool to be used, not the answer in and of itself.

Such representative lines of persuasion don't come out of nowhere. SAS, itself a CRM provider, has studied the issue in depth, calling on independent analysts along the way. One of them has this to say:

"Chief marketing officers face an uphill battle managing a disparate collection of marketing technologies," says Ray Wang, principal analyst and CEO of Constellation Research Inc. "As CMOs take over more of the technology budget, they expect integrated marketing tools along the customer experience journey. Strategy and planning should match information and analytics. Orchestration and interaction should flow with customer experience. These new solutions must deliver on a design point around integrated marketing across channels and across digital strategies."

COCC, a core banking provider, offers an illuminating white paper on this subject that puts it in the most basic terms: "For all the noise generated about CRM, it's easy to lose sight of one simple fact: CRM can enhance a bank's profitability."

It offers four CRM ingredients that can help a community bank use the customer information already at its disposal to enhance its bottom line:

•Relate information. Ask, on a regular basis: What do you know about your customers? What do you need to know about your customers? What is the profile of your profitable customers? If you know these, the staff can call up a given customer's profile and find that customer's product gaps.

•Establish a sales and service culture. Even with the best customer information in the world, if the staff won't sell the product, it doesn't matter. Emphasize service to the customer, rather than sales, to persuade staff members who might not be natural sales people.

•Develop a profitability plan. Using the same information to define one's customers, particularly transaction data, the bank can also develop a revenue plan based on customer, product, and branch profitability. Harness the attention of everyone in the organization about the overall revenue goals, and provide appropriate rewards and incentives.

•Fit it all together. CRM and profitability require bank-wide commitment and consistency of message to staff, customers, and the broad market for the bank's financial services. To work effectively, the bank's core, electronic banking, and profitability systems must be thoroughly integrated with the CRM system.

Archimedes is reported to have said: "Give me a place to stand and with a lever I will move the whole world." Today's banker should be able to say: "Give me staff members who know how to make CRM work, and we'll exceed our revenue goals."

John Ginovsky is a contributing editor of Banking Exchange and editor of the publication’s Tech Exchange e-newsletter. For more than two decades he’s written about the commercial banking industry, specializing in its technological side and how it relates to the actual business of banking. In addition to his weekly blogs—"Making Sense of It All"—he contributes fresh, original stories to each Tech Exchange issue based on personal interviews or exclusive contributed pieces. He previously was senior editor for Community Banker magazine (which merged into ABA Banking Journal) and for ABA Banking Journal and was managing editor and staff reporter for ABA’s Bankers News. Email him at [email protected]